Activision: Mansion In a Trailer Park, Says Pac Crest

By Tiernan Ray

Video game industry sales rose 4% in November, to $1.46 billion, research firm NPD reported last night, slightly less than the $1.48 billion that Pacific Crest’s Evan Wilson was estimating for the month.

The industry “continues to underwhelm,” Wilson writes. He’s estimating sales will be down double-digits in December, with perhaps a 5% decline in sales for the quarter.

Activision Blizzard (ATVI) looks to have been the big winner, no surprise, Wilson notes, with the top selling game release of all time, Call of Duty: Black Ops. That title made up over a third of software sales in the quarter. Activision’s total sales rose 14%, more than double what Wilson was expecting.

Based on those results, he raised his forecast for sales of Call of Duty to 20 million copies from 16 million previously. Wilson also raised his EPS estimate for Activision for this year and next, to 79 cents from 76 cents.

That’s right: no EPS growth for Activision in 2011. However, given the company will probably beat this quarter’s estimates on Call of Duty sales, the stock is an Outperform, in Wilson’s view. He gives it a $13 price target.

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There are 11 comments

DECEMBER 10, 2010 1:22 P.M.

Why do we listen to these fools? wrote:

"Activision’s total sales rose 14%, more than double what Wilson was expecting."

Why do we still keep broadcasting what people like Wilson "forecast"? HE WAS OFF BY 7%. So then he raises his forecast? Based on what? His knowledge of ___________?

DECEMBER 10, 2010 1:48 P.M.

Tito_White wrote:

Good point.

DECEMBER 10, 2010 1:50 P.M.

Spec wrote:

ATVI is a one-hit wonder

DECEMBER 10, 2010 2:05 P.M.

WoW wrote:

He was off by 100%, if you think about it. Watch what the new WoW release does to their revenue stream in Q4 and the impact on full year results...

DECEMBER 10, 2010 2:09 P.M.

wonderless wrote:

Which 'hit' would that be? Guitar Hero? Call of Duty? World of Warcraft? Or let's go back a few years...Diablo? Crash Bandicoot? Spyro the Dragon?

DECEMBER 10, 2010 2:42 P.M.

They don't know nuthin! wrote:

My favorite was the ML analyst that issued a "Sell" order on ATVI the day the Vivendi merger was announced. The stock doubled over the next few months....

DECEMBER 10, 2010 2:46 P.M.

Blog Patrol wrote:

Deleting comments?

DECEMBER 10, 2010 2:52 P.M.

Tiernan Ray wrote:

BlogPatrol: Hmmm. Not that I know. Did you post a comment that did not show up?

DECEMBER 10, 2010 6:15 P.M.

M.T. wrote:

Seriously you don't need too much beyond cod and wow to lead the industry. Wow is the gift that keeps on giving sales/subscriptions. I agree that maybe someone a little more knowledgeable for projections would be nice.

DECEMBER 10, 2010 6:20 P.M.

M.T. wrote:

Seriously you don't need too much beyond cod and wow to lead the industry. Wow is the gift that keeps on giving sales/subscriptions. I agree that maybe someone a little more knowledgeable for projections would be nice. Not to mention no loss in used/resale in pc games.

DECEMBER 10, 2010 9:51 P.M.

gamers_rule wrote:

Kind of funny that the analysts need to wait until NPD publishes flawed numbers to upgrade their own initially flawed numbers. The folks at aggregame.com published loftier forecasts three weeks ago that seem much more realistic. http://blog.aggregame.com/2010/11/call-of-duty-black-ops-eoy-projections.html I wonder if investors would have liked to have known this trend was coming three weeks earlier?

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.